By David Benigson,
I recently blogged on how the phrase ‘fake news’ has evolved. And how in the majority, it’s been politicians, broadcasters, and celebrities that have played the role of both victim and perpetrator to the fake news mudslinging.
However, in the business world, when the mud of fake news sticks the cost can be significantly more than a dry cleaning bill. Public sentiment towards the brand can shift tarnishing its reputation and consequently cause the company’s share price to suffer.
Best case scenario the share price dip is shallow and short-lived. Worst case it drops off a cliff edge and the recovery is slow and drawn out. The after effects of a fake news scandal can be hard to shake off. The speed of recovery is helped, or hindered, by the timeliness and tone of the company’s public response, the perceived effectiveness of their internal controls and their overall handling of the crisis.
Unsurprisingly, the highest damage is often seen in volatile, unstable markets. In June of this year, one of the co-creators of cryptocurrency platform Ethereum was rumoured to have died in a car crash. The hoax was started on the social media bulletin board 4chan and photos quickly spread across the internet along with speculation on what the future for the company might be.
In the intervening confusion, $4 billion (20%) dropped off Ethereum’s total market value. The man in question, Vitalik Buterin, was forced to post a selfie with the blockchain equivalent of today’s newspaper, to bring the story to an end. Ethereum has recovered and is continuing its stellar run of success, but a $4 billion blip is consequential by anyone’s standards.
Starbucks was recently the victim of a hoax that again was traced back to 4chan. Someone dreamed up ‘Dreamer Day’ claiming all undocumented immigrants in the US could receive a free or heavily discounted (dependent on which of the fake ads circulating you chose to believe) iced coffee on 11 August 2017.
To many, the event seemed wholly plausible as Starbucks had, under the leadership of previous CEO Howard Schultz, encouraged its baristas to discuss race with customers as part of a campaign that was shelved in 2015. This hoaxer hoped that a free Frappuccino would have immigrants queuing up at Starbucks stores across America where they could then be rounded up by U.S. Immigration and Customs Enforcement (ICE) officers. Not the sort of ICE that customers wanted with their free coffee.
Starbucks stocks had been in decline since 27 July 2017 when it reported weaker than anticipated Q3 revenue and lowered its full-year forecast, and there was no notable drop off as a consequence of this hoax. Starbucks’ swift and decisive action to close down the rumours clearly deflected a financial fallout from the situation.
Co-ordinated efforts to stop these stories at source have now given birth to various boycott strategies. Breitbart News is struggling for ad revenue as campaigning, somewhat ironically started on social media, to blacklist them from media-buying programmes has gathered pace in the US. If you are seen to be a propagator of fake news, a similar destiny may await you. Moat, a digital advertising service that spreads brands across the internet, has claimed it has a fake news fix that will dry up ad revenue for websites peddling falsehoods and conspiracy theories.
Some businesses have opted to employ their own fake news tactics paying writers to masquerade as stock market analysts and publish stories heralding a revival in their company’s fortunes. ImmunoCellular Therapeutics was one such company that allegedly paid a journalist to write a bullish story about their business turnaround published in Seeking Alpha, a website offering stock market insights. As a result, their share price rose strongly for the next few months. Fake news, however, couldn’t protect them from an underperforming product, and eventually, their share price went back down.
Media monitoring tools, like Signal monitor, are used to track stories that have the potential to balloon into fully fledged scandals. Signal’s artificial intelligence based platform provides a critical advantage.
Monsanto recently combatted rumours about their pesticides being responsible for the outbreak of microcephaly cases in Brazil by tracing back to the source of the story. By understanding that such stories are often spread through Twitter by bored agricultural labourers sitting in combines, the company was able to engage with them directly and stop the story spreading further.
Vigilance and speed of response are essential to fighting fake news. Signal monitor offers you an unblinking watchman, able to track and neutralise fake news as soon as it occurs.